Interim Management Statement. at September 30, 2015

Transcription

1 Interim Management Statement at September 30, 2015 This is English translation of the Italian Interim Management Statement, which is the sole authoritative version RCS MediaGroup S.p.A. Via A. Rizzoli, Milan Share Capital 475,134, Company Register and Tax Code/VAT no , REA No

2 Contents Consolidated financial highlights of RCS MediaGroup... 3 Group performance in the third quarter... 4 Group performance in the first nine months of the year... 8 Other Information Operating segment performance Media Italy Media Spain Advertising and Events Corporate Functions and Other Activities Significant events during the third quarter of the year Events after the reporting period Outlook Additional information required by CONSOB pursuant to Art. 114, paragraph 5 of Italian Legislative Decree no. 58/1998 of May 27, Condensed interim consolidated financial statements Condensed income statement Condensed statement of comprehensive income Condensed statement of financial position Condensed statement of cash flows Condensed statement of changes in equity Notes to the condensed interim consolidated financial statements Format, content and other information on the condensed interim consolidated financial statements Statement pursuant to Article 154 bis, paragraph 2 of the Consolidated Finance Act Annexes Related parties

3 CONSOLIDATED FINANCIAL HIGHLIGHTS OF RCS MEDIAGROUP ( /millions) 3rd quarter Sep (3) (3) INCOME STATEMENT Revenue EBITDA (1) ( 17.9) OPERATING LOSS ( 13.5) ( 15.9) ( 75.4) ( 69.4) Loss before tax and non-controlling interests ( 21.3) ( 27.8) ( 127.2) ( 93.6) Income taxes ( 3.1) Loss from continuing operations ( 24.4) ( 26.5) ( 93.4) ( 90.3) Profit (loss) from assets held for sale and discontinued operations (2) ( 7.2) 3.4 ( 33.8) ( 3.3) Loss for the period ( 31.0) ( 23.1) ( 126.4) ( 93.1) Basic earnings per share: continuing operations ( 0.05) ( 0.05) ( 0.18) ( 0.19) Diluted earnings per share: continuing operations ( 0.05) ( 0.05) ( 0.18) ( 0.19) Basic earnings per share: assets held for sale and discontinued operations ( 0.01) 0.01 ( 0.07) ( 0.01) Diluted earnings per share: assets held for sale and discontinued operations ( 0.01) 0.01 ( 0.07) ( 0.01) STATEMENT OF FINANCIAL POSITION Sep Sep Dec Net capital employed Net financial debt (4) Equity Average number of employees excluding those involved with assets held for sale and discontinued operations 3,713 3,724 3,710 Average number of employees 4,037 4,036 4,023 (1) Earnings before interest, tax, amortisation/depreciation and impairment losses. (2) At September 30, 2015 and in the third quarter of 2015, the costs and revenue relating to the activities in the Books segment were reclassified to Profit (loss) from assets held for sale and discontinued operations, for which a sale agreement was signed on October 4, 2015, whose completion is subject to the approval of the competent regulatory authorities: any conditional authorisation measures will not prejudice the completion of the transaction and will not involve changes to the economic terms and conditions agreed for RCS MediaGroup S.p.A.. (3) At September 30 and in the third quarter of 2014, Profit (loss) from assets held for sale and discontinued operations was restated to also take account of the profit (loss) of the Books segment, as well as the results of the investees IGPDecaux and the Finelco Group, classified under assets held for sale and discontinued operations starting from the end of 2014, sold on June 30, 2015 and September 15, 2015 respectively. (4) Indicator of financial structure, calculated as current and non-current financial liabilities less cash and cash equivalents, current financial assets and non-current financial assets recognised for derivatives. Net financial debt as defined by CONSOB in its Communication DEM/ dated July 28, 2006 excludes non-current financial assets. Non-current financial assets at September 30, 2015, September 30, 2014 and December 31, 2014 amounted to zero and, therefore, RCS s financial ratio at September 30, 2015, September 30, 2014 and December 31, 2014 matches the net financial debt as defined by the abovementioned CONSOB Communication. This Interim Management Statement at September 30, 2015 was approved by the Board of Directors on November 12,

4 GROUP PERFORMANCE IN THE THIRD QUARTER The latest official data available on the t trend of Italian GDP refer to the second s quarter of 2015 and confirm the indications of growth, albeit at modest rates, recorded at the start of the year. y In particular, Italian GDP rose by 0.3% compared to the third quarter of 2014 and by 0.7% over the secondd quarter of 2014 (Source: Istat). In the presence of a downturn in exports, shaped by the slowdown in the economies of emerging countries, the main positive contribution to GDP came from f domestic demand. Spanish GDP disclosedd estimated growth of 0..8% in the third quarter of 2015 andd 3.4% on an annual basis (Source: Ine). The advertising market in Italy recorded a fall l of 1.6% in September compared too the same period of 2014 (Source: Nielsen), while Spain registered a positive trend in September, and in the third quarter of 2015 in particular, marking an overall increase of 4.7% compared to the third quarter of 2014, even though advertising sales in the print media segment stilll recorded a decrease of 0.4% over the same period of the previous year. Gross domestic product trends in Italy and Spain in the second quarter of o 2015 are shown below, based on the latest official data available, in comparison with the previous quarters. Source: Data Gross domestic product (GDP) Quarterly GDP 4

5 Reclassified consolidated income statement ( /millions) 3rd quarter 2015 % 3rd quarter 2014 % Difference Difference (4) A B A-B % Revenue (5.0) (2.2%) Distribution revenue (5.9) (5.1%) Advertising revenue (1) % Other publishing revenue (2) % Operating expenses (149.4) (66.8) (165.2) (72.2) 15.8 (9.6%) Personnel expense (67.4) (30.1) (60.9) (26.6) (6.5) 10.7% Allowance for impairment (1.1) (0.5) (1.6) (0.7) 0.5 (31.3%) Provisions for risks (4.8) (2.1) (0.8) (0.3) (4.0) 500.0% EBITDA (3) % Amortisation of intangible assets (9.8) (4.4) (8.9) (3.9) (0.9) Depreciation of property, plant and equipment (4.6) (2.1) (5.2) (2.3) 0.6 Depreciation of investment property (0.2) (0.1) (0.2) (0.1) 0.0 Impairment losses on non-current assets (1.9) (0.8) 1.9 Operating loss (13.5) (6.0) (15.9) (6.9) 2.4 Net financial expense (8.1) (3.6) (10.0) (4.4) 1.9 Gains (losses) on financial assets/liabilities (1.8) (0.8) 1.8 Share of profits (losses) of equity-accounted investees (0.1) (0.0) 0.4 Loss before tax (21.3) (9.5) (27.8) (12.2) 6.5 Income taxes (3.1) (1.4) (4.4) Loss from continuing operations (24.4) (10.9) (26.5) (11.6) 2.1 Profit (loss) from assets held for sale and discontinued operations (4) (7.2) (3.2) (10.6) Loss before non-controlling interests (31.6) (14.1) (23.1) (10.1) (8.5) (Profit) loss attributable to non-controlling interests Loss attributable to owners of the parent (31.0) (13.9) (23.1) (10.1) (7.9) (1) Advertising revenue in the third quarter of 2015 includes 55.2 million earned through the Communication Solutions division, a Group concessionaire (of which 45.2 million by Media Italy, 9.2 million by selling the Space of Other publishers, 0.5 million by Advertising and Events and 0.3 million by Media Spain) and 36.3 million earned directly by publishers (of which 28.7 million by Media Spain, 1.4 million by Advertising and Events, 3.6 million by Media Italy, 2.8 million by Corporate Functions and Other Activities (Sfera) and 0.2 million in intragroup eliminations). Advertising revenue in the third quarter of 2014 includes 55.9 million earned through the Communication Solutions division, a Group concessionaire (of which 46.4 million by Media Italy, 8.3 million by selling the Space of Other publishers, 0.9 million by Advertising and Events and 0.3 million by Media Spain) and 34.8 million earned directly by publishers (of which 30 million by Media Spain, 0.6 million by Advertising and Events, 1.6 million by Media Italy, 2.7 million by Corporate Functions and Other Activities (Sfera) and 0.1 million in intragroup eliminations). (2) Other publishing revenue mostly refers to revenue from the television activities of Media Italy and Media Spain, royalty revenue from third parties, revenue associated with events and exhibitions in Italy and Spain, e-commerce revenue and revenue from the sale of customer lists and children's boxed sets by companies in the Sfera Group. (3) Earnings before interest, tax, amortisation/depreciation and impairment losses. (4) In the third quarter of 2015, the costs and revenue relating to the activities in the Books segment were reclassified to profit (loss) from assets held for sale, for which a sale agreement was signed on October 4, 2015, whose completion is subject to the approval of the competent regulatory authorities. In the third quarter of 2014, profit (loss) from assets held for sale was restated to also take account of the profit (loss) of the Books segment, as well as the results of the investees IGPDecaux and the Finelco Group, classified under assets held for sale and discontinued operations starting from the end of Revenue for the third quarter amounted to million compared with million in the same period in the year before. The decrease of 5 million is the result of the drop of 5.9 million reported in distribution revenue, the increase reported by advertising revenue (+ 0.8 million), while other publishing revenue was essentially stable (+ 0.1 million). The decrease in distribution revenue (down 5.9 million compared to the third quarter of 2014) is due mainly to a decrease in revenue generated by Media Spain (down 4.1 million compared to the third quarter of 2014) as a result of the decrease in circulation in the Spanish market. A slight decrease was recorded in the distribution revenue of the Media Italy segment (down 1.6 million compared to the same period in 2014), due to the drop in circulation, partly offset by the positive effect of increase in the publication price (introduced for Corriere della Sera in January 2015 and for La Gazzetta dello Sport in August 2014 and in June 2015) and the strong performance of sales of add-on products. Advertising revenue in the third quarter of 2015 was essentially stable, registering an increase of 0.8 million compared to the same quarter of The improvement is essentially attributable to the growth in the advertising revenue of the Media Italy segment, deriving from the positive trend in advertising sales for on-line media. The decrease recorded by the advertising revenue of Media Spain (down 0.5 million), was partially 5

6 offset by the positive contribution from the sports events of the Advertising and Events segment, while the advertising sales for third party publishers were essentially stable on the whole for the RCS Group. EBITDA was positive at 1.1 million, compared to positive EBITDA of 0.3 million in the third quarter of Before non-recurring income and expense, EBITDA would amount to a profit of 6.8 million and would be compared to EBITDA of 3.4 million in the same period of 2014, marking an increase of 3.4 million and confirming the improved trend in EBITDA before non-recurring income and expense recorded in the third quarter of 2013 when compared to the same period in the previous year. EBITDA was affected, in the third quarter of 2015, by costs relating to the launch of the Gazzetta TV channel and the comparison with a third quarter of 2014 which benefitted from the effect of the World Cup. Excluding these aspects and the positive impact of the EXPO on EBITDA in the third quarter of 2015, EBITDA before non-recurring income and expense would register an improvement of 5.6 million compared to the third quarter of In particular, an improvement was recorded by EBITDA before non-recurring income and expense in the Media Italy segment (up 3.3 million compared to the third quarter of 2014), due to the advertising sales of EXPO-related projects, the increase in the publication price and constant cost cutting initiatives. EBITDA before non-recurring income and expense in the Media Spain segment recorded a decrease of 0.6 million, from 1.2 million (in the third quarter of 2014), to 0.6 million (in the third quarter of 2015). The variation is due to the fall in distribution revenue, almost fully offset by the cost reduction initiatives. EBITDA before non-recurring income and expense in the remaining segments Advertising and Events and Corporate Functions and Other Activities recorded a positive trend due, respectively, to the strong performance by advertising revenue relating to sports events organised by RCS Sport and the positive impact generated by the more efficient management of the Via Rizzoli offices. In the third quarter of 2015 the cost reduction activities set forth in the Plan continued, whose benefits amounted to 14.1 million, of which 11.3 million in Italy and 2.8 million in Spain. Personnel expense was 67.4 million in the third quarter of 2015 ( 60.9 million in the third quarter of 2014). Net non-recurring expense of 0.7 million, included in the item in the third quarter of 2015, is in contrast to net income of 3.4 million in the third quarter of The change in personnel expense before non-recurring costs would be an increase of 2.4 million, attributable to Media Spain ( 1.5 million) and Advertising and Events ( 0.8 million). Personnel expense before non-recurring costs relating to the Media Italy and Corporate Functions and Other Activities segments was essentially stable. The operating loss amounted to 13.5 million in the third quarter of 2015, compared to a loss of 15.9 million in the same period of The increase of 2.4 million (up 5 million excluding non-recurring expense) is due to the improvement in EBITDA outlined above (up 0.8 million) and the presence of impairment losses of 1.9 million in the third quarter of Amortisation/depreciation recorded a total net increase of 0.3 million, with amortisation of intangible assets up 0.9 million due primarily to higher investments in the television activities of the Media Italy segment, in contrast to lower depreciation of Property, plant and equipment (down 0.6 million) as a result of previous impairment losses on printing facilities and the natural expiration of the amortisation plans of some printing presses. 6

7 A summary of the main indicators by business area relating to the third quarters of 2015 and 2014 is shown below: ( /millions) Revenue EBITDA BEFORE NON- RECURRING ITEMS % of revenue 3rd quarter rd quarter 2014 EBITDA EBITDA OPERATING BEFORE % of % of % of PROFIT Revenue NONrevenue revenue revenue (LOSS) RECURRING EBITDA ITEMS % of revenue OPERATING PROFIT (LOSS) Media Italy % % % % % % Media Spain % (5.0) (6.7)% (9.8) (13.2)% % (4.9) (6.1)% (9.8) (12.2)% Advertising and Events 59.8 (2.9) (4.8)% (3.1) (5.2)% (3.2) (5.4)% 57.8 (3.2) (5.5)% (3.6) (6.2)% (3.6) (6.2)% Corporate Functions and Other Activities 17.0 (6.3) (37.1)% (6.6) (38.8)% (12.4) n.a 17.8 (6.9) (38.8)% (7.0) (39.3)% (12.9) n.a Other and eliminations (48.6) (0.5) 1.0% (0.5) 1.0% (0.5) n.a (51.0) (0.3) 0.6% (0.3) n.a (0.3) n.a Consolidated % % (13.5) (6.0)% % % (15.9) (6.9)% Assets held for sale and discontinued operations (1) Other and eliminations (1.2) (1.7) Total % % (12.9) (4.2)% % % (4.0) (1.3)% % of revenue (1) In the third quarter of 2015, the costs and revenue relating to the activities in the Books segment were reclassified to profit (loss) from assets held for sale, for which a sale agreement was signed on October 4, 2015, whose completion is subject to the approval of the competent regulatory authorities. In line with the classification adopted, reported in detail above, Revenue, EBITDA and EBITDA before non-recurring expense relating to the Books segment were stated separately from the consolidated total for the two quarters being compared. Net financial expense stood at 8.1 million in the third quarter of 2015, down 1.9 million with respect to the 10 million of net financial expense in the third quarter of There was an improvement of 0.8 million due to lower interest expense on loans granted by the banking system, essentially associated with the reduction in interest rates applied following the renegotiation in August This was augmented by benefits due primarily to lower expense deriving from the discounting back of the financial statement items. The share of profits (losses) of equity-accounted investees amounted to 0.3 million (loss of 0.1 million in the third quarter of 2014). These figures reflect the positive result of the associates and joint ventures (in particular, m-dis Distribuzione Media S.p.A.) recorded for the share claimed by RCS. The loss from assets held for sale and discontinued operations came to 7.2 million. This includes the impairment losses recorded on the net assets of the Books group to align its carrying amount to the price agreed in the preliminary sale agreement for the equity investment in RCS Libri S.p.A., signed on October 4, In addition, based on this contract, the estimate of accessory sale expenses allocated at June 30, 2015 was updated. In the third quarter of 2014, the profit from assets held for sale and discontinued operations amounting to 3.4 million, was restated with respect to the total in the interim management statement at September 30, 2014 to take account of the profit accrued in the third quarter of 2014 of the RCS Books group, as well as the losses of the investees IGPDecaux and the Finelco Group, already classified under assets held for sale and discontinued operations starting from the end of The loss for the third quarter of 2015 was 31 million (loss of 23.1 million in the third quarter of 2014). The negative development compared to the net result of the third quarter of 2014 amounted to 7.9 million and reflects the elements already mentioned, and also includes tax expense of 3.1 million determined by lower income from tax consolidation ( 1.3 million in tax income in the third quarter of 2014). 7

8 GROUP PERFORMANCE IN THE FIRST NINE MONTHS OF THE YEAR The Group's financial highlights and related comments are presented below. ( /millions) Sep % Sep % Difference Difference (4) A B A-B % Revenue (28.8) (3.7%) Distribution revenue (10.6) (3.2%) Advertising revenue (1) (14.0) (4.1%) Other publishing revenue (2) (4.2) (4.4%) Operating expenses (505.1) (68.0) (545.4) (70.7) 40.3 (7.4%) Personnel expense (220.4) (29.7) (235.2) (30.5) 14.8 (6.3%) Allowance for impairment (3.1) (0.4) (5.9) (0.8) 2.8 (47.5%) Provisions for risks (9.9) (1.3) (3.2) (0.4) (6.7) 209.4% EBITDA (3) (17.9) (2.3) % Amortisation of intangible assets (28.8) (3.9) (26.2) (3.4) (2.6) Depreciation of property, plant and equipment (14.7) (2.0) (15.8) (2.0) 1.1 Depreciation of investment property (0.5) (0.1) (0.7) (0.1) 0.2 Impairment losses on non-current assets (35.9) (4.8) (8.8) (1.1) (27.1) Operating loss (75.4) (10.1) (69.4) (9.0) (6.0) Net financial expense (26.1) (3.5) (30.8) (4.0) 4.7 Gains (losses) on financial assets/liabilities (1.6) (0.2) (1.9) (0.2) 0.3 Share of profits (losses) of equity-accounted investees (1.0) (0.1) 2.4 Loss before tax (101.7) (13.7) (103.1) (13.4) 1.4 Income taxes (4.5) Loss from continuing operations (93.4) (12.6) (90.3) (11.7) (3.1) Loss from assets held for sale and discontinued operations (4) (33.8) (4.5) (3.3) (0.4) (30.5) Loss before non-controlling interests (127.2) (17.1) (93.6) (12.1) (33.6) (Profit) loss attributable to non-controlling interests Loss attributable to owners of the parent (126.4) (17.0) (93.1) (12.1) (33.3) (1) Advertising revenue at September 30, 2015 includes 190 million earned through the Communication Solutions division, a Group concessionaire (of which million by Media Italy, 31.4 million by selling the Space of Other publishers, 0.9 million by Advertising and Events and 1.3 million by Media Spain) and million earned directly by publishers (of which 100 million by Media Spain, 17.1 million by Advertising and Events, 11.5 million by Media Italy, 9.3 million by Corporate Functions and Other Activities (Sfera) and 0.4 million in intragroup eliminations). Advertising revenue at September 30, 2014 includes million earned through the Communication Solutions division, a Group concessionaire (of which million by Media Italy, 30.2 million by selling the Space of Other publishers, 1.4 million by sundry Events and 1.1 million by Media Spain and million earned directly by publishers (of which million by Media Spain, 17.1 million by Advertising and Events, 6.8 million by Media Italy, 9.5 million by Corporate Functions and Other Activities (Sfera) and 0.7 million in intragroup eliminations). (2) Other publishing revenue mostly refers to revenue from the television activities of Media Italy and Media Spain, royalty revenue from third parties, revenue associated with events and exhibitions in Italy and Spain, e-commerce revenue and revenue from the sale of customer lists and children's boxed sets by companies in the Sfera Group, which are classified within the Corporate Functions and Other Activities segment. (3) Earnings before interest, tax, amortisation/depreciation and impairment losses. (4) At September 30, 2015, the costs and revenue relating to the activities in the Books segment were reclassified to Loss from assets held for sale and discontinued operations, for which a sale agreement was signed on October 4, 2015, whose completion is subject to the approval of the competent regulatory authorities: any conditional authorisation measures will not prejudice the completion of the transaction and will not involve changes to the economic terms and conditions agreed for RCS MediaGroup S.p.A.. At September 30, 2014, loss from assets held for sale was restated to also take account of the profit (loss) of the Books segment, as well as the results of the investees IGPDecaux and the Finelco Group, classified under assets held for sale and discontinued operations starting from the end of

9 The change in revenue with respect to September 30, 2014 is presented below. M Distribution/ Sundry Advertising Revenue September 2014 Media Italy Media Spain Other Total Amounts received non controlling interests Revenue September 2015 Revenue at September 30, 2015 amounted to 743 million, marking a decrease of 28.8 million over the first nine months of Revenue from digital activities, which are transversal across almost all segments of the Group, reached million at September 30, 2015, up 3.3% compared to the first nine months of 2014, and accounts for 15.2% of total Group revenue (14.2% in the first nine months of 2014). Distribution revenue in September 2015 recorded a decrease of 10.6 million over the first nine months of The main events which affected the drop in distribution revenue concerned: The 15.4 million decrease in distribution revenue in the Media Spain segment, due to the general fall in circulation and a different promotional plan. The increase in distribution revenue of the Media Italy segment, amounting to 5.3 million, generated despite the fall in copies circulated, due to the strong performance of the sales of add-on products and the increase in the cover price of Corriere della Sera, set at 1.5 in January 2015 and of La Gazzetta dello Sport in August 2014 (set at 1.4) and in June 2015 (set at 1.5). The publishing revenue of the Verticals segment also recorded an increase, albeit modest, due to the launch of two new monthly products, more releases of monographic products and the increase in the prices of add-on products registered at overall level with respect to the same period in Advertising revenue up to September 30, 2015 came to million, down 14 million compared to the figure in the same period of The change is attributable to Media Italy ( 10.3 million) and Media Spain ( 1.3 million). The comparison was adversely impacted in Italy by the negative effect of the advertising market, in addition to the effect of the 2014 World Cup, on the advertising revenue of the sporting publications La Gazzetta dello Sport and Marca as well as the special initiatives implemented in On the whole, the decrease in the RCS Group s revenue, excluding the aforementioned elements and the revenue generated by the EXPO in 2015, would amount to 6.4 million. In particular, the advertising revenue of Media Spain would record an increase of 0.4% compared to the first nine months of The advertising revenue of third party publishers, in Italy and Spain registered an overall drop of 2 million. 9

10 The advertising revenue of the Verticals segment was essentially stable, also due to the strong performance of the IO Donna website. Other publishing revenue recorded a net decrease of 4.2 million. The variation is primarily attributable to the other publishing revenue of Media Spain, down 2.8 million due to the termination of the broadcasting of two of the four television channels in May 2014 as a result of the enforcement of the ruling of the Spanish Supreme Court, as well as to the other publishing revenue of Media Italy, down by 1 million as a result of lower revenue from television subscriptions to the pay-tv channel. EBITDA was a profit of 4.5 million (loss of 17.9 million in the first nine months of 2014), marking an improvement of 22.4 million compared to the same period of Excluding 12.9 million in non-recurring expense in the first nine months of 2015, EBITDA would be a positive 17.4 million, and would be compared with positive EBITDA of 9.2 million in the same period of 2014 before non-recurring expense, marking an 8.2 million improvement. This increase was, nonetheless, adversely impacted by the costs incurred in 2015 for the launch of the channel Gazzetta TV and the comparison with the first nine months of 2014 characterised by the presence of the World Cup and the special editions of Corriere della Sera and La Gazzetta dello Sport. Excluding these aspects and the positive impact of the EXPO on EBITDA in the first nine months of 2015, EBITDA before non-recurring income and expense would register an improvement of more than 21 million compared to the first nine months of Net non-recurring expense up to September 30, 2015, amounting in total to 12.9 million, included 6.1 million for personnel restructuring plans relating to Media Spain ( 3.4 million) and to Media Italy ( 2.7 million). They also include the costs of Media Spain totalling 7.4 million, related to the adjustment into line with the local legislation recently introduced for the national regulation of television activities and the contract expenses as a result of company restructuring plans. The remaining non-recurring expense totalled 0.6 million, relating mostly to the restructuring of the geographic network of agents in the Communication Solution sector. Lastly, Media Italy recorded non-recurring income of 1.2 million, relating to provisions previously allocated as non-recurring expense for the rationalisation of production facilities and excess profits on completion of initiatives. At September 30, 2015 the cost reduction activities set forth in the Plan continued. The benefits of these activities in the first nine months of 2015 amounted to 38.1 million, of which 29.8 million in Italy and 8.3 million in Spain (hitting 70% of the target set for 2015 amounting to 54.5 million, excluding the efficiencies of the Books segment). 10

11 The change in EBITDA before non-recurring income and expense with respect to September 30, 2014 is presented below. M Total efficiencies +38 EBITDA September 2014 Media Italy Media Spain Advertising and Events Corporate Functions and Other Activities EBITDA September 2015 The improvement in EBITDA before non-recurring income and expense, with respect to the first nine months of 2014, is 8.2 million and regards: The increase in EBITDA before non-recurring expense recorded by Media Italy (up 3.5 million), despite the lower advertising revenue, benefitting from the increase in the cover price of the paper publications and the ongoing actions for recovering efficiency. In particular, based on a more homogeneous comparison, i.e. excluding the penalising effect of a comparison with EBITDA before non-recurring expense in the first nine months of 2014 driven by significant sporting events and on a like-for-like basis as regards the expense incurred in 2015 for the launch of Gazzetta TV, the increase in EBITDA before non-recurring expense would be 14.9 million. The increase in EBITDA before non-recurring expense for the Media Spain segment (up 3.3 million) is due to the ongoing initiatives to cut costs and recover efficiency and the growth in digital revenue. Excluding the penalising effect of a comparison with EBITDA before non-recurring expense in the first nine months of 2014 driven by significant sporting events and the negative impact of the closure of two television channels, the improvement recorded with respect to the first nine months of 2014 would be 5.8 million. The increase in EBITDA before non-recurring expense of the Advertising and Events segment (up 3.4 million compared to the first nine months of 2014), attributable to both the higher advertising revenue generated by RCS Sport, in particular by the Giro d Italia and the The Color Run, and the actions taken to enhance efficiency. The decrease in the EBITDA before non-recurring expense of the Corporate Functions and Other Activities segment. This variation, excluding the effect of the suspension of Group brand subscription management activities (acquired from Media Italy), would be essentially stable. The Group continued making investments in property, plant and equipment and intangible assets, which amounted to 26.2 million in the first nine months of 2015, 6 million of which was invested in Media Italy s 11

12 television activities. Around half of the remaining investments were made in the digital and Information Technology area. In particular, in and up to the present day - actions continued to enhance publishing and enrich the digital offer for the Corriere della Sera and La Gazzetta dello Sport publications, with a view to increasing the total audience and strengthening vertical channels with the launch of new subject areas and initiatives, also linked to the EXPO The Corriere della Sera s stand #CasaCorriere@Expo was hugely successful, with more than 700 events organised, 200 thousand visitors, 100 thousand copies of Corriere distributed, 200 thousand of the EXPO s ViviMilano guides, 108 million pages visited and 2,250,000 streaming videos. Brilliant results were also achieved by Tempo delle Donne, an event held by Corriere della Sera from 1-4 October, by La 27Ora with Io Donna, Fondazione Corriere and Valore D, which saw more than 12 thousand people take part and the Graphic Novel exhibition, staged at the Triennale di Milano to celebrate the fourth year of La Lettura, the culture supplement of Corriere offered in a new format in July.. Then, at the start of September, Corriere launched its new digital edition, with a unique app for all devices, with exclusive content and services like national and international press reviews. La Gazzetta dello Sport consolidated its website leadership, hitting new records and surpassing three million unique browsers, revolutionising its offer with Gazzetta Tv, achieving excellent results from the live coverage of the Copa America and a constantly expanding programme schedule thanks to Gazzetta Live, Gazzetta Stories and the CEV volleyball Champions League, as well as the World Grand Prix and foreign football during the summer. A number of events were organised including the Football Heroes and Immagini a Canestro ball don t lie exhibitions, dedicated to the NBA championships, also a key player in the enhancement of the fantasy game offer in collaboration with Dunkest, a start-up incubated in RCS NEST. Finally, several new initiatives were launched like GazzaNet, the network dedicated to fans, Gazzetta World, the new news section for the overseas public and GazzaPlay, the on-demand video platform of La Gazzetta dello Sport. On the magazines front, several initiatives were implemented, including the restyling of the website iodonna.it and oggi.it, the new Dove and Style Magazine, special editions dedicated to the September fashion shows in amica.it and iodonna.it, the launch of Fashion Issue of Io donna and a multitude of successful events, including the The Art of Living and Landshape exhibitions. As regards advertising, excellent feedback was received for the activities of RCS Communication Solutions and NuMix Agency, who launched the innovative format of Native Long Form ADV, at the start of the Change is Good campaign. Expansiòn, the leading business newspaper in Spain, after the new website, launched Expansión Economía Digital in October, dedicated to the business world in the digital era, while following Marca s success with Marca Buzz, dedicated to a young target audience, in October El Mundo launched the portal for digital natives FCINCO. As regards major sporting events, the following runs were successful: Milan City Marathon, The Color Run, Electric Run, Edenred Ekirun and TELVA Running and YO DONA Run the Night in Spain, while in cycling, huge success was achieved by the 98 th edition of the Giro d Italia,, the second Dubai Tour and the first Abu Dhabi Tour. The 2015 edition of Bimbinfiera also received excellent feedback, the largest event dedicated to families in Italy. Personnel expense decreased by 14.8 million. This change, excluding from that item net non-recurring expense from the first nine months of 2015 totalling 6.1 million, and from the first nine months of 2014 totalling 19.9 million, would have been an overall decrease of 1 million as a result of downturns for Media Italy (down 2.7 million) and Corporate Functions and Other Activities (down 2.3 million) and the increases recorded by Media Spain (up 3 million) and Advertising and Events (up 1 million). The operating loss came to 75.4 million, compared to a loss 69.4 million in the first nine months of The change was a decrease of 6 million, despite the improvement in EBITDA mentioned above, due mainly to 12

13 the higher impairment losses recorded in 2015 compared to the same figure in 2014 ( million) as well as to higher amortisation/depreciation incurred ( -1.3 million). Impairment losses stood at 35.9 million at September 30, 2015, ( 8.8 million at September 30, 2014). They refer, for 34.7 million, to the publications of the Unidad Editorial Group (net of the reversal of the impairment loss on the publication Expansion amounting to 1.1 million) and for 1.2 million to the goodwill present in Sfera s Corporate Functions and Other Activities segment. These impairment losses were recorded as a result of the impairment tests performed on June 30, In particular, the result of the impairment test of the publications of the Unidad Editorial Group was due to the periodic updating of the market parameters used. Subsequently, no impairment indicators were found (triggering events). The net increase in amortisation/depreciation reflects the effect of higher amortisation of intangible assets ( -2.6 million), offset by lower depreciation of property, plant and equipment. In particular, the higher amortisation/depreciation is attributable to the television activities of Media Italy, and more specifically, to the investments in executive productions relating to the channels Lei and Dove and to the new channel Gazzetta TV, as well as to new investments made by Corporate Functions in the digital and IT field. The depreciation of property, plant and equipment fell as a result of the previous impairment losses relating to printing facilities. Revenue, EBITDA and operating profit (loss) by operating segment are summarised below, illustrated in the Operating segment performance section, to which reference should be made for more details. ( /millions) Sep Sep EBITDA BEFORE NON- Revenue RECURRING ITEMS % of revenue EBITDA % of revenue OPERATING PROFIT (LOSS) % of revenue Revenue EBITDA BEFORE NON- % of RECURRING revenue ITEMS EBITDA % of revenue OPERATING PROFIT (LOSS) Media Italy % % % % % % Media Spain % (2.3) (1.0)% (51.9) (22.1)% % (21.5) (8.4)% (36.0) (14.0)% Advertising and Events % % % (2.0) (0.8)% (2.8) (1.1)% (2.9) (1.2)% Corporate Functions and Other Activities 53.8 (22.6) (42.0)% (23.0) (42.8)% (41.6) n.a 55.6 (21.2) (38.1)% (21.4) (38.5)% (38.4) n.a Other and eliminations (163.7) (0.9) 0.5% (0.9) 0.5% (1.0) n.a (177.0) (0.3) 0.2% (0.3) n.a (0.3) n.a Consolidated % % (75.4) (10.1)% % (17.9) (2.3)% (69.4) (9.0)% Assets held for sale and discontinued operations (1) (23.9) (0.1) Other and eliminations (5.1) (5.7) Total % % (98.4) (10.9)% % (16.3) (1.8)% (69.2) (7.5)% % of revenue (1) In the first nine months of 2015, the costs and revenue relating to the activities in the Books segment were reclassified to Profit (loss) from assets held for sale, for which a sale agreement was signed on October 4, 2015, whose completion is subject to the approval of the competent regulatory authorities. In line with the classification adopted, also reported in detail above, Revenue, EBITDA and EBITDA before non-recurring expense relating to the Books segment were stated separately from the consolidated total for the two periods being compared. Net financial expense decreased by 4.7 million, down from 30.8 million at September 2014 to 26.1 million in the first nine months of There was an improvement of 1.9 million due to lower interest expense on loans granted by the banking system, essentially associated with the reduction in interest rates applied following the renegotiation in August This was augmented by benefits due primarily to lower expense deriving from the discounting of the financial statement items. Losses on financial assets amounted to 1.6 million, attributable to the impairment loss on a financial receivable from a printing centre, the settlement expense of certain investees and the impairment loss on financial assets held for sale. At September 30, 2014, this item was a loss of 1.9 million, essentially due to the impairment loss on financial receivables. The share of profits of equity-accounted investees amounted to 1.4 million, compared to a loss of 1 million in the first nine months of The increase of 2.4 million would fall to 1.5 million, if we exclude from the comparison the effects, in 2014, of the impairment loss on the investee Inimm Due S.a.r.l.. This variation is essentially attributable to the better overall results of the group investees m-dis Distribuzione Media S.p.A. and Unidad Editorial (in particular Corporation Bermont). The loss from assets held for sale and discontinued operations amounted to 33.8 million at September 30, This includes the impairment losses recorded on the net assets of the Books group to take account of the price agreed in the preliminary sale agreement for the equity investment in RCS Libri S.p.A., signed on October 4, 2015, and an estimate of the accessory sales expense, as well as a profit of 1.1 million due to the adjustment of previous impairment losses on the equity investment in the Finelco Group, to align the carrying amount to the definitive sale price. The loss from assets held for sale and discontinued operations came to

14 million at September 30, This amount differs from the values shown in the Interim Management Statement at September 30, 2014 published, as it was restated to take account not only the result of the RCS Libri group, but the profits accrued in the first nine months of 2014 by the investees IGPDecaux and the Finelco Group, subsequently classified under assets held for sale and discontinued operations starting from the end of At September 30, 2014, the item also included 6.8 million in capital gains realised on the Via Solferino property, whose disposal in 2013 was subject to a condition precedent connected with the exercising of a right of pre-emption, which then expired without having been exercised. Income taxes registered an income of 8.3 million at September 30, 2015, compared to a tax income 12.8 million in taxes at September 30, This item includes deferred tax assets of 9.1 million, partially offset by IRAP of 0.2 million and taxes of previous years and on foreign companies of 0.6 million. This change in income taxes mainly relates to RCS MediaGroup S.p.A. (- 3.4 million), mainly due to the fall in income from tax consolidation (- 7.5 million), offset by lower IRAP tax (+ 4.1 million). The loss for the first nine months of 2015 is million ( 93.1 million in the first nine months of 2014), and reflects the trends described above, adjusted by losses attributable to non-controlling interests ( 0.8 million). Breakdown of the average number of employees by geographic segment The exact headcount of the RCS Group at September 30, 2015 was up 40 on September 30, Excluding the books segment, classified under assets held for sale and discontinued operations, the increase is 9 units due to more temporary contracts (+54 units) and the reduction in permanent contracts (-45 units). The trend in the workforce was characterised by hiring for the purpose of developing new business/activities or for replacements, partially offset by efficiency drives and transactions involving a change of scope (-27 units in the Corporate Functions and Other Activities segment in relation to the closure of Sfera China). The exact headcount at September 30, 2015 (4,007) includes 397 people in Italy working under solidarity arrangements, with a reduction in working hours of 15%, up to a maximum of 30% (145 journalists for the publication La Gazzetta dello Sport, 148 journalists in the Childhood Verticals segment, 104 other noneditorial staff of the companies RCS MediaGroup S.p.A. and RCS Produzioni S.p.A.). The exact headcount broken down by geographic segment is shown below. Exact headcount Italy Spain Other countries Total Sep-30 Sep-30 Sep-30 Sep Media Italy 1,516 1, ,525 1,533 Media Spain 0 0 1,446 1, ,446 1,417 Advertising and Events Corporate Functions and Other Activities Consolidated total 2,114 2,101 1,483 1, (*) 3,656 Assets held for sale and discontinued operations Books Total 2,402 2,372 1,483 1, ,007 3,967 (*) of which 163 on temporary contracts 14

15 The average number of RCS Group employees in the first nine months of 2015 totalled 4,037, in line with the figure in the same period of 2014 (4,036). Excluding the Books segment, assets held for sale and discontinued operations, (+12 attributable mainly to the consolidation of the company Adelphi), the average headcount in 2015 is, by contrast, down 11 units compared to the figure in the same period of Net of the Books segment, the trend in the workforce was characterised, on the one hand, by the restructuring plans and efficiency initiatives, and on the other, the development of new business and operations involving a change in the scope of consolidation. A particularly significant reduction was recorded in the workforce in the Corporate Functions and Other Activities segment (-55, as a result of efficiency initiatives), while the average workforce of the Media Spain (+29, as a result of the development of new projects and the acquisition of new professional profiles, particularly in the digital area), Advertising and Events (+10 mainly as a result of the strengthening of RCS Sport S.p.A.) and Media Italy (+5, due in particular to the acquisition of the business unit relating to RCS Produzioni Padova, partially offset by the closing of the company Rizzoli Bejing Advertising) segments were higher than the figure recorded in September Employees working in the Group s foreign operations accounted for approximately 40% of the Group s average total at September The breakdown of the average number of employees by geographic segment is shown below. Italy Spain Other countries Total Average headcount Sep-30 Sep-30 Sep-30 Sep Media Italy 1,533 1, ,542 1,537 Media Spain 0 1,451 1, ,451 1,422 Advertising and Events Corporate Functions and Other Activities Consolidated total 2,127 2,139 1,488 1, ,713 3,724 Assets held for sale and discontinued operations Books Total 2,405 2,402 1,488 1, ,037 4,036 15

16 Reclassified statement of financial position ( /millions) Sep % Dec % Intangible assets Property, plant and equipment Investment property Financial assets Non-current assets Inventories Trade receivables Trade payables (296.3) (45.5) (395.2) (52.3) Other assets/liabilities (55.4) (8.5) (22.8) (3.0) Net working capital (88.4) (13.6) Provisions for risks and charges (57.7) (8.9) (83.7) (11.1) Deferred tax liabilities (61.8) (9.5) (75.6) (10.0) Employee benefits (43.2) (6.6) (53.7) (7.1) Net operating capital employed Net capital employed from assets held for sale Net capital employed Equity Non-current financial liabilities Current financial liabilities Non-current financial liabilities recognised for derivatives Non-current financial assets recognised for derivatives Cash and cash equivalents and current financial assets (22.7) (3.5) (25.5) (3.4) Net financial debt related to operating activities Net financial debt (liquidity) of assets held for sale (1) - - Net financial debt (1) Total sources of financing (1) Indicator of financial structure, calculated as current and non-current financial liabilities less cash and cash equivalents, current financial assets and non-current financial assets recognised for derivatives. Net financial debt as defined by CONSOB in its Communication DEM/ dated July 28, 2006 excludes non-current financial assets. Non-current financial assets at September 30, 2015 and December 31, 2014 amounted to zero and, therefore, RCS s financial ratio at September 30, 2015 and December 31, 2014 matches the net financial debt as defined by the above-mentioned CONSOB Communication. Net operating capital employed amounted to million and reports a net decrease of million compared to December 31, The change is primarily due to the net capital employed in the Books segment, classified under net capital employed held for sale and discontinued operations at September 30, 2015, but stated on a line-by-line basis in the figures at December 31, 2014 for an overall contribution to net capital employed at December 31, 2014 of around 112 million. The residual variation (on a like-for-like basis) of around 74 million is essentially attributable to the reduction of 44.7 million in intangible assets ( 35.9 million due to the impairment losses on intangible assets), a decrease of roughly 65 million in trade receivables (due to both less revenue than the third quarter of 2015 and the fourth quarter of 2014 and a general drop in revenue) and, bucking the trend, to the reduction in the provisions for risks and charges, deferred tax liabilities and employee benefits totalling 27.5 million. Please refer to the specific notes of this interim management statement for comments on the trend in the main items of net capital employed. Net financial debt amounted to 500 million, marking an increase of 17.5 million since December 31, Worthy of note is the increase of around 35 million in cash flows generated by ordinary operations compared to the same period in 2014, and the income from the disposal of the equity investments in IGPDecaux and the Finelco Group. The positive contributions partially offset the disbursements relating to non-recurring expense and new investments. 16

17 OTHER INFORMATION Rizzoli civil litigation In relation to this case, please refer to the section Other Information in the Annual Financial Report at December 31, 2014, noting that Mr. Rizzoli s death was announced at the hearing on October 21, 2014 and the Appeals Court suspended the proceedings. Subsequently, in late January 2015, the successors took up the case once again. At the hearing on March 3, 2015, the case was postponed for the presentation of final pleadings on October 6 and subsequently to December 22 for said incumbents. Veo Tv civil litigation As reported in the section Other information of the Annual Report at December 31, 2014, on November 24, Veo Television S.A. received an additional appeal submitted by M&M Infonet Associated s.l. against the agreement of the Council of Ministers of June 11, 2010 whereby the concession on the second television channel of the remaining two channels that are currently broadcast is transformed into a licence. In Veo Television S.A. s response, it requested that this appeal be found inadmissible or rejected. On June 11, M&M Infonet Associated s.l. communicated its waiver, asking the Supreme Court to dismiss the case. On June 30, 2015, the Supreme Court upheld the request from M&M Infonet Associated S.L., declaring the case to be dismissed. RCS Sport Events In relation to the liability action lodged against the former Chief Executive Officer of RCS Sport S.p.A., please refer to the section Other Information in the Annual Report at December 31, It should be noted that the Court of Milan issued a measure on January 27, 2015 postponing the first hearing to May 26, 2015 to enable the defendants to summon third parties. RCS MediaGroup S.p.A. received this summons on February 12 and 19. At the hearing on May 26, the Judge, having acknowledged the non-completion, within the legal terms, of the notification from the defence counsel of the former General Manager to a former employee, put the first hearing back to November 10, 2015, to allow the renewal of the notice to the former employee. At this hearing, the judge declared the contumacy of the aforementioned former employee and assigned the terms for the filing of preliminary briefs. The next hearing is set for May 24, With reference to the criminal proceedings in which RCS Sport S.p.A. has been charged with an administrative offence, the Judge for Preliminary Investigations at the Court of Milan upheld the compromise request formulated by RCS Sport and issued a judgment, ordering the party to pay a sum of 250,000, applying an amount equal to half of that envisaged for the penalty based on the pre-selected procedure ( application of penalty requested by the party ), also awaiting full compensation of the damages to public entities as well as the adoption of an organisational model suited to prevent the same type of offences as those verified. A preliminary hearing has been set for December 17, for the accused former employee and the other defendants to appear before the Court of Milan. ********** Effective as of August 7, 2012, the Company decided to take advantage of the rights set forth in Art. 70, paragraph 8 and Art. 71, paragraph 1-bis of the Regulation pursuant to CONSOB Resolution no /1999 as amended. 17